Renzi to resign after budget is passed into law.

Italy's president Sergio Mattarella has asked prime minister Matteo Renzi to stay in office for a few days more, until next year's budget is passed into law, probably by the end of this week. Although Renzi announced that he would be resigning immediately after his overwhelming defeat in the referendum on constitutional reform on 4 December he has now been asked to get his government's budget provisions through parliament before he leaves office.

Only after that will President Mattarella start the official process of finding a new prime minister. The first stage will involve discussions with all the political parties and parliamentary groups, as well as other key figures, such as the previous president of the republic, Giorgio Napolitano, and the heads of the two houses of parliament. This is standard procedure before the formation of a new government and it can take several days.

One course of action open to the president would be to send Renzi back to parliament for a vote of confidence. This seems unlikely as the vote against Renzi's constitutional reforms has clearly demonstrated that Renzi does not have the confidence of the country. Furthermore the out-going prime minister himself has made it clear that his resignation is unequivocal.

Another option for Mattarella would be to bring forward the general elections due in spring 2018 and have a snap vote early next year. The two main parties that led the successful No vote, the Movimento 5 Stelle and the Lega Nord, together with Silvio Berlusconi's Forza Italia, have already indicated that this is what they want in order to capitalise on their present political momentum.

However the president appears to be against early elections because the Constitutional Court still has to rule on the constitutionality of the new electoral law, known as the Italicum, passed by parliament in 2015. A court ruling is scheduled for January. But whatever the Consulta, as it is called, decides the Italicum only applies to the election of members of the chamber of deputies and not the senate. If elections are to be brought forward to spring 2017 then voting for the two houses would be regulated by different laws unless there is some quick thinking and political agreement on a new reform.

It is therefore probable that President Mattarella will opt for an interim government of technocrats until the 2018 elections. The names being put forward to head such a government are Pier Carlo Padoan, who is well known in European and international financial circles. Two other possibilities are the minister for culture Dario Franceschini and the head of the senate Pietro Grasso, both highly respected political figures.

Mattarella will in any case need to take into account the strategy of Renzi's own party the Partito Democratico (PD) which still holds the majority in parliament. Badly lacerated by the referendum and the years of Renzi prime-ministership, the party's governing council will meet in the next few days to decide its policy.

At present Renzi is also still head of the PD. Unless he decides to step down as party secretary – and there are no signs that he is thinking of doing so – Renzi will continue to have an important say in political developments in the months ahead.